UK is out of step with the rest of the world on access to water

Author

Visiting professor of Public Services International Research Unit, University of Greenwich

Disclosure statement

David Hall has received funding for research from the European Commission FP5 and FP6 programmes, European Commission DG Devco, Rockefeller Brothers Foundation, University of Greenwich, Public Services International, European Public Services Union, Oxfam, World Development Movement, and others.

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A petition on the human right to water, signed by 1.8m people across Europe, was presented last month in Brussels. The petition called on the European Commission to recognise the UN resolution that water is a human right and to ensure that water and sanitation assets are in public control, free from EU market rules.

The petition was remarkable for a number of reasons. It was the first European Citizens Initiative – a provision for direct democracy inserted in the recent revision of the EU treaty, which says that the European Commission has to listen and respond to petitions signed by over one million people in at least seven countries. In doing this, the issue was brought before the European Parliament.

The biggest support came in Germany, aided by popular TV comedian Erwin Pelzig. The show urged viewers to sign, while mocking EU rules that forbade the campaign’s web address to be broadcast by filming a car on which the address was displayed. The initiative had support from a wide range of organisations and was led by the European Federation of Public Service Unions, which represents public service workers across the continent.

Supporting the human right to water is surprisingly controversial for European governments. Though the UN made water a human right in 2010, most EU countries, along with with the USA, did not support this vote – Germany and Spain were notable exceptions.

More challenging for the EU is the element of the initiative declaring water is a common good and should not be subject to the competition rules of the internal market. This flies in the face of core EU market principles.

But some effect has already been seen. The commission has agreed to exclude water from its new directive on concessions, which is intended to make privatisation easier. It also increases the pressure on the EU to exclude water, and public services in general, from the new trade deal being planned with the USA and Canada. Plus, it strengthens demands for the EU to make more aid available for partnerships with European public sector water operators instead of supporting the failing model of public-private partnerships.

Global pattern

The initiative is the latest step by campaigns against water privatisation which have had remarkable success across the globe. Major water multinationals such as French groups Suez and Veolia have retreated from much of their business in developing countries as a result of campaigns. They have also suffered the humiliation of losing their home city, Paris, to a new municipal service in 2010.

Paris has inspired other towns and cities in France and elsewhere in Europe, including Berlin and Budapest, to terminate private water contracts. The Reclaiming Public Water Network estimates that more than 85 cities have switched from private to public in the past decade. Globally, more than 90% of water services are in public hands.

This leaves the UK, or more precisely England, looking increasingly isolated – although there have been successful campaigns against water privatisation elsewhere in the UK. In Scotland, water services were spared the Thatcher privatisation and in Northern Ireland the campaign against water privatisation was the lead issue in the first assembly elections. It brought an improbable unity between Sinn Fein and the DUP, which led to the assembly’s first policy decision being to keep water public.

Private profits in England

Private companies in England, however, are now celebrating their 25th year of lucrative exploitation of their natural monopolies, with most of them now owned by private equity consortia or Asian multinationals. The companies are extracting profits of around £2 billion a year above the cost of a public service funded through low-cost public debt. This means renationalisation would save the average household £83 per year, cutting bills by more than 20%.

This year should have seen the expiry of the original licences awarded in 1989. But a new clause requiring 25 years notice of termination has effectively extended their contracts indefinitely – the clause seems to be of no concern to the competition authorities of the UK or the EU.

Profits of private companies are partly based on relentless price rises. They are nearly double the overall rate of inflation since the 1980s, which have left 23.6% of households in water poverty (defined as water bills at over 3% of household income). Profits are also reinforced by tax avoidance schemes which channel payments through tax havens. Companies resist reinvesting their profits in updating their services – Thames Water insists that government or consumers should pay the lions’ share of the costs of modernising London’s sewerage system.

The companies have not found it difficult to convince the water industry regulator, OFWAT, of the need for generous price caps. They do so by overestimating the amounts they expect to spend on capital maintenance and then underspending these estimates by a significant amount. This reinforces their stream of profits, but not our water and sewerage networks. It may not have been a coincidence that the only serious flood in London this winter came not from the storms but from the fracturing of a mains water pipe in Kennington.

Despite all this, the Greens are the only UK party to support bringing water back into the public sector. This makes them the only party in line with public opinion on this issue. The most recent poll on the issue found more than 70% of people favour renationalisation of the water sector – almost exactly the same as the proportion which opposed privatisation 25 years ago.